The following post is by contributor Christen Babb of Nurture Baby.
As the years change, so do our goals. In 2011, with the economy still on its way up, a common new year’s resolution is to budget better and spend wisely. We work hard to pinch every penny, but it’s just as important to impart our knowledge and experience (the good and the bad) onto the next generation.
As Dave Ramsey, a well known financial personality says, “Parents are not just responsible for providing food, clothing, and shelter for their kids. They are also responsible for teaching their kids about life—and life includes handling money.” If we don’t teach our children how to properly handle money, someone else – or some other crafty ad campaign – will.
A common way to to teach little ones the value of a dollar is to create a reward system based on a set of simple, kid-friendly responsibilities.
When to Start?
I believe it’s important for kids to start doing simple household chores before they receive a reward – perhaps as early as 3 or 4 years old. Tasks such as sorting and putting away silverware, feeding the pets, “folding” the towels (don’t aim for perfection!) are fun, age-appropriate jobs for eager little helpers. It sets the tone that some jobs are not paid – they are simply responsibilities for being a part of the family. Kids who help around the home gain self-respect and take pride in a job well done. They learn early on that other rewards, such as allowance, are secondary benefits.
Allowance vs. Commission: What’s the Difference?
Once kids understand the concept of money and that some task are required just because, it’s a good time to introduce a simple compensation plan. Traditionally, parents use an allowance system, but setting your child up on a commission plan might be more effective.
Consider that allowance is a fixed amount of money given each week for a complete set of chores. There is not much room for flexibility or over-achievement. Commission, on the other hand, teaches kids that rewards come from hard work. The harder you work, the greater the reward.
For example, once my four year completes her weekly family chores – like feeding the dog and cleaning her room, she has the opportunity to earn extra income for chores around the home. Commission for extra chores can range from 10¢ to $1. (For the over-achievers, it might be wise to set up a reasonable commission cap in advance!)
Photo by Pink Sherbet
Teach them how to handle money: Give, Save, Spend
Ah, it’s so much easier said than done, isn’t it? But teaching your little one this lesson early is so important. After all, it’s much less painful to make a dollar mistake as a child than it is a thousand dollar one as an adult.
- Give. Whether in the form of a tithe to your church or a donation to a favorite charity, it’s so important to teach children to give first. Why? Because if it doesn’t happen first, it often doesn’t happen. Plus, it teaches children to think of others’ needs before their own – a valuable lesson that will serve them well in life.
- Save. It’s time to bring back the art of delayed gratification in a world where credit has become a way of life. No pun intended, help “save” your children the heartache of spending money they don’t have.
- Spend. Not too hard a lesson to teach, but an equally important one – kids should reap the reward of their hard work! Wisely spending their earned money builds character, fosters self-confidence, and teaches responsibility.
When introducing children to allowance or a commission plan, be sure to impart that hard work isn’t always about earning a dollar. Hard work through service can be much more rewarding than any amount of money earned. Consider adding an extra service day to the chore calendar– even if it’s a simple task every few months. This will heighten your child’s awareness to others’ needs and she may even help you come up with a few service ideas. Your little one might not be able to scrape snow off a driveway, but she can certainly help you make a meal for a sick neighbor. It’s one more way to teach your child the value of hard work and it’s rewards, whether monetary or voluntary.
How do you teach your children to handle money in your home?